We recommend the common stock of independent oil and gas producer ConocoPhillips (COP) for unlevered appreciation potential of 42% to estimated net present value (NPV) of $96 a share. Active drilling on company lands in each of the top three shale oil plays, Eagle Ford, Bakken and Permian, promises 70% of 300,000 barrels equivalent daily of COP worldwide production growth expected by 2016 (see slides Eagle Ford and Permian on page 2). We are intrigued that the traditionally valuable San Juan Basin may attract new enthusiasm as COP applies breakthrough fracking to the Mancos shale, a rich formation historically not willing to give up its natural gas as readily as the Mesa Verde, Dakota, and Fruitland which are the main contributors of current production. Other sources of growth that chief executive Ryan Lance emphasizes include Canada, the North Sea, Australia and Malaysia. Recent press reports allude to a $6 billion deal with oil companies from India, which would buy into the company’s deep oil sands resources in Canada (see slide Canada SAGD on page 3). Oil dominates NPV at 74% while natural gas is nearly half of volume (see tables Functional Cash Flow and Present Value on page 3 and Next Twelve Months Operating and Financial Estimates on page 4). In an optimistic sign for future value, natural gas for the next six years, priced recently at $4.24 a million Btu, trades at its highest weekly level since mid-January when the warm winter price collapse began (chart Natural Gas Futures on page 10). The history-making, for its size, separation of the predecessor integrated company into an independent producer, COP, and an independent refiner/petrochemical company, Phillips 66 (PSX), appears to have been well-timed for stockholder success, especially evident in PSX’s 35% stock price advance.